Video Advertising Is The Fastest Growing Ad Format Online

Video advertising is the fastest growing advertising format online, so says a new survey from BrightRoll—one of the largest online video advertising networks. The pace of growth for online video ad spending is expected to remain around 40% for 2010—the same rate of growth as 2009. A full 94% of advertising executives plan more spending in 2010 for online video ads than ever before. In the previous year's survey, that number was 87%. (Christopher covered this entire report in great detail about a week ago.)

So why are agencies moving so hard and fast to online video ads? Well, why do ad agencies keep doing anything? Because it's working. More than 50% of respondents said video was the most effective form of advertising—heck, 83% said they were getting more value for their dollar than just one year ago.

That's pretty significant. Do you remember even one or two years ago how much talk there was about advertisers not feeling like they get the most for their money with online ads? How much less they were willing to spend versus traditional television commercial spending? All that talk now looks more like empty speculation with each passing month.

Part of the reason for advertisers flocking to online video in great numbers is a turnaround in one key area: targeting. For years, online video's inability to accurately target viewers with ads based on demographic information was its Achilles' heel. But in the past year, the online video industry has regained the agencies' trust by turning that particular lemon into very tasty lemonade—agencies now see the targeting capabilities of online video to be its greatest asset.

No one wants to throw away money on ad impressions with audiences that weren't going to be customers anyway. The more that online video can demonstrate their ability to accurately match users with videos that appeal to them, the more advertisers are going to jump in with both feet. It's the confidence that your ad will be seen by people in your actual target audience, instead of just any old viewer.

The BrightRoll conclusions shouldn't really be surprising to us. We already know viewers are willing to tolerate more ads than they're being served. And now we have ad agencies that have gone from skeptic to convert in 12 months and are now trumpeting the effectiveness of online video ads.

And according to new reports from Bloomberg, the number of advertisers on YouTube videos has increased tenfold in just the past year. This is exactly what I like to see… separate sources confirming each others' conclusions. The YouTube data on advertiser growth serves to underline and add exclamation points to the BrightRoll survey. So even if you want to take issue with the survey sampling size or parameters (which I have been known to do myself), the fact that we have two separate data sources offering a glimpse at the same general conclusion is comforting. I think we can safely say that ad spending for online video is on the rise, and will continue to rise.

Part of this is because video itself is on the rise. Don't forget the recent news that YouTube viewers watch nearly 100 videos each on a monthly basis—meaning they're watching more videos than ever. I mean, some portion of this growth in online video ads is simply an attempt by advertisers to be wherever the audience is. But there's one thing I feel pretty confident in declaring about ad agencies—they don't like to throw money away. They're measured on their performance. And if they see themselves increasing spending for online video ads in the coming year, then it's because they have the backend data that proves (at least to them) that it's working… that they can create revenue for their clients via video ads.

So does this mean we can expect to see YouTube turn profitable soon? Is it a foregone conclusion? Of course it is. They've increased advertisers by 1000% in one year, and advertisers are bullish about the future of online video ads. Someday, probably sooner than we think, YouTube will post a harmless footnote on their blog saying, "Oh, by the way, we're profitable now.” Heck, I wouldn't be surprised if they already are profitable and just aren't telling us yet.

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Jeremy Scott is the founder of The Viral Orchard, an Internet marketing firm offering content writing and development services, viral marketing consulting, and SEO services. Jeremy writes constantly, loves online video, and enjoys helping small businesses succeed in any way he can.